Wednesday, July 29, 2009

Deciding Advertising Budget

Thus, it is a controversy that how does a company know if it is spending the right amount on advertising .It is been assumed that large consumer good company spend more on advertising as a form of insurance and bank. Organization often understated the power of company and product image building and tends to under spend. Organization often considers advertising as expense rather investment.
There are five specific factors to consider when setting the advertising budget.

1.Stage of the product life cycle
2.Marketing share and consumer base
3.Competition and Culture
4.Advertising frequency
5.Product Inscrutability

However, the organization can use various model to select their ad spending which are as follows:

•Affordable Method

•Percentage of Sales Method

•Competitive Parity Method

•Objective and task Method

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